Lunit Completes 171.5 Billion KRW Funding for Bolpara Acquisition via Convertible Bonds

Medical artificial intelligence (AI) company Lunit raised 66% of the approximately KRW 260 billion needed to acquire Volpara Health Technologies through convertible bonds (CBs).

On the 25th, Lunit announced through a disclosure that it decided to issue KRW 171.5 billion worth of anonymous, interest-bearing, unsecured private placement CBs to acquire 100% of Volpara's shares. The entire issuance was absorbed by more than 30 participating institutions. The conversion price is KRW 54,872 per share. The bond maturity is five years, and the bonds can be converted into shares starting one year after issuance. The payment date is scheduled for the 3rd of next month.

All funds raised through this CB issuance will be used for acquiring Volpara's securities. The acquisition cost is AUD 292.53 million, which is approximately KRW 260 billion based on the recent exchange rate.

The company explained that the scale of this convertible bond issuance is very unusual in the industry. Over the past two years (February 2022 to January 2024), the average amount raised through convertible bonds in the pharmaceutical and bio industries was KRW 17.2 billion, and the maximum amount raised was around KRW 100 billion. Lunit's KRW 171.5 billion fundraising is about 10 times the industry average, which is analyzed as a result of market consensus, including many institutional investors, on Lunit's acquisition of Volpara and its mid- to long-term management strategy.

Through the acquisition of Volpara, Lunit expects to create synergy in the U.S. sales of its breast imaging AI analysis solutions, Lunit Insight MMG and Lunit Insight DBT, a 3D breast tomosynthesis AI analysis solution. Lunit's solutions will be distributed through Volpara's U.S. network, significantly reducing the costs of establishing new sales channels in the U.S.

Seobum Seok, CEO of Lunit, said, “Due to strong investor interest and demand, the convertible bond issuance proceeded on a larger scale than originally planned. The remaining funds will be covered by our own cash reserves. Since this fundraising is for mergers and acquisitions rather than operating funds or debt repayment, the funds will be strategically used for business expansion and synergy creation after the acquisition.”

Lunit's acquisition of Volpara is expected to be finalized by the end of next month. It is anticipated that Lunit will achieve break-even point (BEP) within next year through increased sales based on the customer base and market share secured by acquiring Volpara.